Awards for Excellence 2017
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At Credit Suisse, the Asia-Pacific wealth management business is tasked with little short of saving the whole bank worldwide. While the bank struggles globally, it has at least had the common sense to deploy capital in the places it is good at, specifically serving Asia-Pacific entrepreneurs. That makes the bank our winner for Asian wealth management.
Suitably bolstered with risk-weighted assets, the model of the newly formed Apac division is, in essence, to get entrepreneurs into the private banking side and then serve their investment banking needs. It is not a unique model but it is most clearly expressed at Credit Suisse, with both sides of the business in one division with a single P&L.
And it appears to be working. In 2016, the private banking business in Asia achieved net new asset inflows of SFr13.6 billion ($14 billion), an annualized growth rate of 9%, despite being the bank most obviously impacted by the Indonesian tax amnesty. Assets under management increased 11% during the year to SFr167 billion and net revenues were up 17% to SFr1.37 billion. Pre-tax income rose 8% even in a year when 60 new relationship managers were added to the cost base. Growth was broad-based across the three core revenue components: net interest income, recurring commissions and fees, and transaction-based revenue.
First-quarter numbers were better still. Revenues in the Apac wealth management and connected activities division were up 44% year on year, of which private banking generated well over two thirds; while AuM were up 19% and net new assets were up 33% year on year – a 13% annualized growth rate.
Far more so than in other parts of the world, Asian wealth is dominated by entrepreneurs: about 80% of new wealth in the region is generated by first- or second-generation businesses; 85% of businesses in Asia are family-owned. Credit Suisse’s 640 relationship managers excel in this part of the market.
Doing this properly means going local, with 80% of wealth in any market domestic. Credit Suisse has grown its share of onshore business systematically over the last four years, well beyond the Singapore and Hong Kong hubs. It has well-established onshore domestic private banking businesses in Australia, Japan, India and most recently Thailand. The last of these took a year to prepare and launch, a rapid genesis assisted by the integration of private banking and investment banking businesses, with a client relationship coverage team set up through the bank’s local securities entity.
A clincher for the award was that, while UBS, Standard Chartered and DBS were all penalized by the Monetary Authority of Singapore for their role in the 1MDB scandal, Credit Suisse had not by the time that we finalized the awards. Since then Credit Suisse has also been penalized. The fine was modest, but may count the bank out of the award in 2018.
